Complete the following statements by filling in the blanks. 1. _______ _______ usually covers a period of one year. 2. _______ is the process of monitoring planning decisions and evaluating an organization’s activities and employees. 3. _______ is the process of setting goals and making plans to achieve them. 4. _______ _______ usually covers a period of 5 to 10 years.
> What journal entry is recorded when a materials manager receives a materials requisition and then issues materials (both direct and indirect) for use in the factory?
> Access Piaggio’s Website (www.piaggiogroup.com) and select “Governance” and then select “Company boards.” Read the section dealing with the role of its board of directors. Required 1. Identify the role of Piaggio’s board of directors. 2. How would manage
> The chapter used a percent of labor cost to assign factory overhead to jobs. Identify another factor (or base) a company might reasonably use to assign overhead costs.
> Assume Sprint will install and service a server to link all of a customer’s employees’ smartphones to a centralized company server, for an upfront flat price. How can Sprint use a job order costing system?
> Harley-Davidson manufactures 30 custom made, luxury-model motor cycles. Does it account for these motorcycles as 30 individual jobs or as a job lot? Explain.
> Why must a company prepare a predetermined overhead rate when using job order cost accounting?
> Assume that Arctic Cat produces a batch of 1,000 snowmobile helmets. Does it account for this as 1,000 individual jobs or as a job lot? Explain (consider costs and benefits).
> Piaggio applies overhead to product costs. What account(s) is (are) used to eliminate overapplied or underapplied overhead from the Factory Overhead account, assuming the amount is not material?
> Polaris uses a “time ticket” for some employees. What is the difference between a clock card and a time ticket?
> In a job order cost accounting system, what records serve as a subsidiary ledger for Goods in Process Inventory? For Finished Goods Inventory?
> What information is recorded on a job cost sheet? How do management and employees use job cost sheets?
> Why must a company estimate the amount of factory overhead assigned to individual jobs or job lots?
> Assume that we tour Polaris’ factory where it makes its products. List three direct costs and three indirect costs that we are likely to see.
> Prepare the cost of goods sold section of a partial income statement for Success Systems for the month ended January 31, 2014.
> Prepare a manufacturing statement for Success Systems for the month ended January 31, 2014. Assume the following manufacturing costs: Direct materials: $2,200 Factory overhead: $490 Direct labor: $900 Beginning goods in process: none (December 31, 2013)
> Adria Lopez, owner of Success Systems, decides to diversify her business by also manufacturingcomputer workstation furniture. Required1. Classify the following manufacturing costs of Success Systems by behavior and traceability. Cost by Behavior Cost
> Nestlé reports beginning raw materials inventory of 3,243 and ending raw materials inventory of 3,904 (both numbers in millions of Swiss francs). If Nestlé purchased 16,200 (in millions of Swiss francs) of raw materials during the year, what is the amoun
> Match each lean business concept with its best description by entering its letter in the blank. 1. _______ Just-in-time manufacturing 2. _______ Continuous improvements 3. _______ Customer orientation 4. _______ Total quality management A. Focuses on q
> Identify the usual sequence of manufacturing activities by filling in the blank (1, 2 or 3) corres ponding to its order: _______ Production activities; _______ sales activities; _______ materials activities.
> A company has year-end cost of goods manufactured of $4,000, beginning finished goods inventory of $500, and ending finished goods inventory of $750. Its cost of goods sold is 1. $4,250 2. $4,000 3. $3,750 4. $3,900
> Compute cost of goods sold for year 2013 using the following information. Finished goods inventory, Dec. 31, 2012 . . . . . . . . . . . . $345,000 Goods in process inventory, Dec. 31, 2012 . . . . . . . . . . . 83,500 Goods in process inventory, Dec. 31,
> Three inventory categories are reported on a manufacturing company’s balance sheet: (a) raw materials, (b) goods in process, and (c) finished goods. Identify the usual order in which these inventory items are reported on the balance sheet. 1. (b)(c)(a) 2
> Verdi Company produces sporting equipment, including leather footballs. Identify each of the following costs as direct or indirect if the cost object is a football produced by Verdi. 1. Electricity used in the production plant. 2. Labor used on the footb
> Alex Velez and Nikhil Arora of Back to the Roots must understand manufacturing costs to effectively operate and succeed as a profitable and efficient business. Required 1. What are the three main categories of manufacturing costs the owners must monitor
> Which of these statements is true regarding fixed and variable costs? 1. Fixed costs stay the same and variable costs increase in total as activity volume increases. 2. Both fixed and variable costs increase as activity volume increases. 3. Both fixed an
> Which of these statements is true regarding product and period costs? 1. Factory maintenance is a product cost and sales commission is a period cost. 2. Sales commission is a product cost and depreciation on factory equipment is a product cost. 3. Sales
> Identify whether each description most likely applies to managerial or financial accounting. 1. _______ Its primary users are company managers. 2. _______ Its information is often available only after an audit is complete. 3. _______ Its primary focus is
> Managerial accounting (choose one) 1. Is directed at reporting aggregate data on the company as a whole. 2. Provides information that is widely available to all interested parties. 3. Must follow generally accepted accounting principles. 4. Provides info
> Refer to QS 1-12 and compute raw materials inventory turnover and the number of days’ sales in raw materials inventory.
> Prepare the 2013 manufacturing statement for Briton Company using the following information. Direct materials . . . . . . . . . . . . . . . . . . . . . $190,500 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . 63,150 Factory overhead costs
> Canon manufactures digital cameras and must compete on lean manufacturing concepts. Match each of the following activities that it engages in with the lean manufacturing concept it strives to achieve. (Some activities might relate to more than one lean m
> The following calendar year-end information is taken from the December 31, 2013, adjusted trial balance and other records of Elegant Furniture. Required1. Prepare the company’s 2013 manufacturing statement. 2. Prepare the companyâ
> Shown here are annual financial data at December 31, 2013, taken from two different companies. Required1. Compute the cost of goods sold section of the income statement at December 31, 2013, for each company. Include the proper title and format in the s
> Sharp Edges makes specialty skates for the ice skating circuit. On December 31, 2012, the company had (a) 1,500 skates in finished goods inventory and (b) 2,500 blades at a cost of $20 each in raw materials inventory. During 2013, Sharp Edges purchased 4
> The following calendar-year information is taken from the December 31, 2013, adjusted trialbalance and other records of Dahlia Company. Required1. Each team member is to be responsible for computing one of the following amounts. You are not to duplicat
> Assume that you must make a presentation to a client explaining the difference between prime and conversion costs. The client makes and sells 200,000 cookies per week. The client tells you that her sales staff also would like a clarification regarding pr
> Listed here are the total costs associated with the 2013 production of 15,000 Blu-ray Discs (BDs) manufactured by Nextgen. The BDs sell for $18 each. Required1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or
> Refer to Decision Maker, Purchase Manager, in this chapter. Assume that you are the motorcycle manufacturer’s managerial accountant. The purchasing manager asks you about preparing an estimate of the related costs for buying motorcycle seats from supplie
> This chapter described the purpose of managerial accounting in the context of the current business environment. Review the home electronics section of your local newspaper; the Sunday paper is often best. Review advertisements of home electronics and ide
> Many fast-food restaurants compete on lean business concepts. Match each of the following activities at a fast-food restaurant with the lean business concept it strives to achieve. Some activities might relate to more than one lean business concept. ____
> The following calendar year-end information is taken from the December 31, 2013, adjusted trial balance and other records of DeLeon Company. Required1. Prepare the company’s 2013 manufacturing statement. 2. Prepare the companyâ&
> Shown here are annual financial data at December 31, 2013, taken from two different companies. Required1. Compute the cost of goods sold section of the income statement at December 31, 2013, for each company. Include the proper title and format in the s
> Notaro’s Boot Company makes specialty boots for the rodeo circuit. On December 31, 2012, the company had (a) 300 pairs of boots in finished goods inventory and (b) 1,200 heels at a cost of $8 each in raw materials inventory. During 2013, the company purc
> Assume that you must make a presentation to the marketing staff explaining the difference between product and period costs. Your supervisor tells you the marketing staff would also like clarification regarding prime and conversion costs and an explanatio
> Listed here are the total costs associated with the 2013 production of 1,000 drum sets manufactured by DrumBeat. The drum sets sell for $500 each. Required1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or per
> Managerial accounting professionals follow a code of ethics. As a member of the Institute of Management Accountants, the managerial accountant must comply with Standards of Ethical Conduct. Required 1. Identify, print, and read the Statement of Ethical
> Refer to Decision Maker, Purchase Manager, in this chapter. Assume that you are the motorcycle manufacturer’s managerial accountant. The purchasing manager asks you about preparing an estimate of the related costs for buying motorcycle seats from supplie
> This chapter explained the purpose of managerial accounting in the context of the current business environment. Review the automobile section of your local newspaper; the Sunday paper is often best. Review advertisements of sport-utility vehicles and ide
> Following are three separate events affecting the managerial accounting systems for different companies. Match the management concept(s) that the company is likely to adopt for the event identified. There is some overlap in the meaning of customer orient
> Listed below are costs of providing an airline service. Classify each cost as (a) either variable or fixed and (b) as either direct or indirect. Consider the cost object to be a flight. Cost by Behavior Cost by Traceability Cost Variable Fixed Direct
> Customer orientation means that a company’s managers and employees respond to customers’ changing wants and needs. A manufacturer of metal parts has created a customer satisfaction survey that it asks each of its customers to complete. The survey asks ab
> Use the information in Exercise 1-12 to prepare an income statement for Shanta Company (a man ufacturer). Assume that its cost of goods manufactured is $534,390.
> Given the following selected account balances of Shanta Company, prepare its manufacturing statement for the year ended on December 31, 2013. Include a listing of the individual overhead account balances in this statement. Sales $1,250,000 Raw materi
> For each of the following accounts for a manufacturing company, place a ✔ in the appropriate column indicating that it appears on the balance sheet, the income statement, the manufacturing statement, and/or a detailed listing of factory
> The following chart shows how costs flow through a business as a product is manufactured. Some boxes in the flowchart show cost amounts. Compute the cost amounts for the boxes that contain question marks. Materials Activity Raw materials purchases $5
> Distinguish between direct labor and indirect labor.
> Compute cost of goods sold for each of these two companies for the year ended December 31, 2013. File Edit View Insert Format Tools Data Window Help S5 Halvetica loman 254% Log Homes Manufacturing 1 Viking Retail 2 3 Beginning inventory 4 Merchandise
> Using the following data, compute (1) the cost of goods manufactured (2) the cost of goods sold for both Garcia Company and Culpepper Company Culpepper Company Company Garcia Beginning finished goods inventory Beginning goods in process inventory B
> Current assets for two different companies at calendar year-end 2013 are listed here. One is a manufacturer, Salomon Skis Mfg., and the other, Sun Fresh Foods, is a grocery distribution company. (1) Identify which set of numbers relates to the manufactu
> Georgia Pacific, a manufacturer, incurs the following costs. (1) Classify each cost as either a product or a period cost. If a product cost, identify it as direct materials, direct labor, or factory overhead, and then as a prime and/or conversion cost.
> Listed here are product costs for the production of soccer balls. (1) Classify each cost (a) as either variable or fixed and (b) as either direct or indirect. (2) What pattern do you see regarding the relation between costs classified by behavior and co
> (1) Identify each of the five cost classifications discussed in the chapter. (2) List two purposes of identifying these separate cost classifications.
> Both managerial accounting and financial accounting provide useful information to decision makers. Indicate in the following chart the most likely source of information for each business decision (a decision can require major input from both sources, in
> In the following chart, compare financial accounting and managerial accounting by describing how each differs for the items listed. Be specific in your responses. Financial Accounting Managerial Accounting I. Time dimension 2. Users and decision make
> Besides inventories, what other assets often appear on manufacturers’ balance sheets but not on merchandisers’ balance sheets?
> Why does managerial accounting often involve working with numerous predictions and estimates?
> Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs, and DVDs. Its reporting year-end is December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because
> Explain why product costs are capitalized but period costs are expensed in the current accounting period.
> Explain why knowledge of cost behavior is useful in product performance evaluation.
> Should we evaluate a manager’s performance on the basis of controllable or noncontrollable costs? Why?
> What product cost is listed as both a prime cost and a conversion cost?
> Access Dell’s annual report (10-K) for the fiscal year ended February 3, 2012, at the SEC’s EDGAR database (SEC.gov) or its Website (Dell.com). From its financial statement notes, identify the titles and amounts of its inventory components.
> Can management of a company such as Polaris use cycle time and cycle efficiency as useful measures of performance? Explain.
> Define and describe two measures to assess raw materials inventory management.
> Describe the relations among the income statement, the manufacturing statement, and a detailed listing of factory overhead costs.
> Prepare a proper title for the annual “manufacturing statement” of Arctic Cat. Does the date match the balance sheet or income statement? Why?
> List the four components of a manufacturing statement and provide specific examples of each for Polaris.
> Both Polaris and Arctic Cat provide warranties on the products they sell. Accurate estimates of these future warranty claims are important. Access the annual report or 10-K for both Polaris (from Appendix A) and Arctic Cat. The Polaris report is for the
> List several examples of factory overhead.
> What are the three categories of manufacturing costs?
> Manufacturing activities of a company are described in the _______. This statement summarizes the types and amounts of costs incurred in its manufacturing _______.
> Why does a manufacturing company require three different inventory categories?
> Distinguish between direct material and indirect material.
> How do an income statement and a balance sheet for a manufacturing company and a merchandising company differ?
> Distinguish between (a) factory overhead and (b) selling and administrative overhead.
> Refer to this chapter’s Global View. Porsche AG is the manufacturer of the Porsche automobile line. Does Porsche produce in jobs or in job lots? Explain.
> An advertising agency is estimating costs for advertising a music festival. The job will require 200 direct labor hours at a cost of $50 per hour. Overhead costs are applied at a rate of $65 per direct labor hour. What is the total estimated cost for thi
> At the beginning of a period a company predicts total direct materials costs of $900,000 and total overhead costs of $1,170,000. If the company uses direct materials costs as its activity base to allocate overhead, what is the predetermined overhead rate
> A company allocates overhead at a rate of 150% of direct labor cost. Actual overhead cost for the current period is $950,000, and direct labor cost is $600,000. Prepare the entry to close over- or underapplied overhead to cost of goods sold.
> Explain how business activities and inventories for a manufacturing company, a merchandising company, and a service company differ.
> A company’s Factory Overhead T-account shows total debts of $624,000 and total credits of $646,000 at the end of a period. Prepare the journal entry to close the balance in the Factory Overhead account to Cost of Goods Sold.
> A company incurred the following manufacturing costs this period: direct labor, $468,000; direct materials, $354,000; and factory overhead, $117,000. Compute its overhead cost as a percent of (1) direct labor and (2) direct materials. Express your answer
> During the current month, a company that uses a job order cost accounting system incurred a monthly factory payroll of $175,000, paid in cash. Of this amount, $44,000 is classified as indirect labor and the remainder as direct for the production of Job 6
> During the current month, a company that uses a job order cost accounting system incurred a monthly factory payroll of $180,000, paid in cash. Of this amount, $40,000 is classified as indirect labor and the remainder as direct. Prepare entries to record
> During the current month, a company that uses a job order cost accounting system purchases $50,000 in raw materials for cash. It then uses $12,000 of raw materials indirectly as factory supplies and uses $32,000 of raw materials as direct materials. Prep
> Clemens Cars’ job cost sheet for job A40 shows that the cost to add security features to a car was $10,500. The car was delivered to the customer, who paid $14,900 in cash for the added features. What journal entries should Clemens record for the complet
> List the three types of costs that are typically recorded on a job cost sheet. How can managers use job cost sheets?
> Determine which products are most likely to be manufactured as a job and which as a job lot. 1. Hats imprinted with company logo. 2. Little League trophies. 3. A hand-crafted table. 4. A 90-foot motor yacht. 5. Wedding dresses for a chain of stores. 6
> Record the journal entry to close over- or underapplied factory overhead to Cost of Goods Sold for each of the independent cases below. Marsh Concert Ellis Home Promotions Builders Actual indirect materials costs $22,000 $ 12,500 Actual indirect labo
> Refer to information in Exercise 2-7. Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.
